Market drivers and catalysts
Equities: US equities rose on rate-cut hopes and AI demand, Europe edged higher on defence strength, Asia steadied pre-holiday.
Volatility: VIX near 20, Fed minutes hawkish, PCE ahead, puts remain bid
Digital Assets: Bitcoin and Ethereum ranging, IBIT and ETHA softer, crypto macro-driven, PCE key catalyst
Fixed Income: US treasury yields back up on FOMC minutes, weak 20Y auction. Japan’s longest bonds in strong demand.
Currencies: USD firms on FOMC minutes and higher US yields. AUD rallies on latest jobs data. JPY weakens again.
Commodities: Gold pauses at USD 5,000 as Fed caution offsets Middle East tensions, while Brent moves back above USD 70
Macro events: Philadelphia Fed Business Outlook & Pending Home Sales
Macro headlines
Federal Reserve officials appeared wary of cutting interest rates at their January meeting, with several suggesting the central bank may need to raise rates if inflation remains high. The minutes of the meeting showed most officials believed last year's labor market weakness was fading, and that the risk of more persistent inflation remained.
Australia reported strong labour market data for January, as the overall unemployment rate stayed steady at 4.1% versus an expected rise to 4.2%. Employment change on the month was strong for a second consecutive month at +50.5k.
UK headline inflation eased to 3.0% in January 2026, the lowest since March 2025, driven by slower transport and food price rises. Core inflation fell to 3.1%, its lowest since August 2021, although an even steeper drop to 3.0% was expected.
Japan's core machinery orders surged 19.1% in December 2025 to ¥1,052.5 billion, beating expectations after an 11% drop in November. Manufacturing orders rose 25.1%, non-manufacturing 8.2%. Significant rises were seen in petroleum, metals, real estate, and machinery industries. Private-sector orders climbed 16.8% year-on-year.
According to Axios, Trump has escalated tensions with Iran, raising worries about a potential major conflict in the region.
US housing starts rose 6.2% in December 2025 to 1.404 million, exceeding forecasts. Single-family starts increased, and multi-family starts surged. Activity rose in the West, Northeast, and Midwest but fell in the South. In 2025, 1,358,700 units were started, a 0.6% decline from 2024.
US manufacturing output rose 0.6% in January 2026, surpassing expectations. Durable goods increased 0.8%, including motor vehicles, while nondurable goods went up 0.4%. Capacity utilization hit 75.6%, below the long-term average.
US durable goods orders fell 1.4% in December 2025, mainly due to transportation equipment. Orders excluding transportation rose 0.9%, while those excluding defense fell 2.5%. Non-defense capital goods excluding aircraft rose 0.6%. In 2025, orders increased 7.8% year-over-year.
The NY Fed's business activity index dropped to -25.7 in February 2026, showing sharp contraction. Employment fell, wage growth rose, and supply worsened. Costs stayed high, but firms expect modest improvement in six months.
Macro calendar highlights (times in GMT)
China’s markets are closed for Lunar New Year through Monday, 23 February.
1200 – USDA 2026-27 Acreage Outlook for Key Crops
1330 – Philadelphia Fed Business Outlook for February
1330 – US Dec Trade Balance
1330 – US Weekly Initial Jobless Claims
1500 – Eurozone Feb Consumer Confidence
1500 – US Jan Pending Home Sales
1530 – EIA Natural Gas Storage Change
1700 – EIA Weekly Crude and Fuel Stocks Report
Earnings this week
Today: Walmart, Alibaba, Nestle, Airbus, Rio Tinto, Deere, Newmont, Zurich Insurance, Constellation Energy, Southern Company, Quanta Services, Targa Resources
Friday: Air Liquide, Warner Brothers Discovery, Anglogold Ashanti, Ango American, Danone
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: Nasdaq 100 gained 0.8%, the S&P 500 added 0.6%, and the Dow rose 0.3% as investors kept pricing several rate cuts this year. Fed minutes showed officials still worried that inflation could cool only slowly, but that did not derail risk appetite. Nvidia rose 1.6% after Meta said it plans to deploy millions of its chips, while Amazon gained 1.8% and Micron jumped 5.3% as institutional demand stayed firm. Palo Alto Networks fell 6.8% after a softer outlook reminded markets that “guidance season” still has teeth, with attention now on the next inflation and jobs updates.
Europe: Stoxx 50 rose 1.3% and Stoxx 600 added 1.2% as defense shares led Europe higher. BAE Systems surged after stronger-than-expected profit, and reports that Germany may take a minority stake in KNDS ahead of a potential listing kept the sector in focus. Markets also digested fresh chatter about possible European Central Bank leadership changes, which added to rate speculation after the Fed minutes. Carrefour slid 4.8% on weaker operating profit, and attention now turned to the next run of earnings and ECB signals.
Asia: Hang Seng Index rose 0.5% to 26,706 in its last session before the Spring Festival break, after two down days, as light trading still leaned risk-on. Sentiment improved as Washington delayed key tech security measures ahead of an April Trump–Xi meeting, while hopes for post-holiday stimulus grew after weak January consumer inflation and ongoing producer deflation. China Hongqiao gained 3.9%, Techtronic rose 3.5%, and AIA added 2.6% as broad sectors advanced. Hong Kong markets were closed Tuesday to Thursday and mainland bourses were already shut for the week, leaving investors to watch for policy signals when trading resumed.
Volatility
US equities closed higher on Wednesday, with the S&P 500 finishing at 6,881.31 (+0.56%), while the VIX eased to 19.62, down 0.67 on the day. Short-term volatility gauges also cooled, with VIX1D at 14.58 and VIX9D at 19.08. In practical terms, markets are not in panic mode, but investors are still keeping a layer of protection in place.
The latest Fed minutes struck a slightly hawkish tone, reinforcing that rate cuts are not imminent if inflation remains sticky. That keeps the focus firmly on Friday’s core PCE inflation data, the Fed’s preferred gauge. Today’s Philadelphia Fed index and weekly jobless claims may move markets intraday, but PCE is likely to set the tone into the weekend. With the US 10-year yield near 4.10%, equities remain sensitive to any inflation surprise.
Based on current SPX options pricing, the market is implying roughly ±69 points (around ±1.0%) into Friday’s 20 February expiry from the 6,881 level.
Today’s expiry skew shows puts still priced slightly richer than comparable calls near at-the-money strikes. That indicates investors continue to pay up for downside insurance rather than positioning aggressively for upside.
Digital Assets
Crypto markets are trading with a cautious tone after the Fed minutes reinforced uncertainty around the path of US interest rates. Bitcoin is around $67,142, Ethereum near $1,983, with Solana close to $82 and XRP around $1.43. Price action is relatively contained, but the broader direction remains closely tied to macro developments and rate expectations.
Crypto-linked equities reflect that same hesitancy. IBIT and ETHA both declined on Wednesday (IBIT −2.2%, ETHA −2.8%), while Coinbase and MicroStrategy also traded lower. Earlier options flow suggested investors were maintaining exposure but layering in protection rather than adding aggressively to risk.
The near-term focus is Friday’s core PCE data. A stronger-than-expected inflation print could support the dollar and weigh on higher-beta assets such as crypto, while a softer reading may reopen room for renewed upside momentum.
Fixed Income
US Treasuries sold off, in part on the FOMC minutes revealing a reluctance to pull the trigger on further rate reductions, but also as a Treasury auction of 20-year drew the weakest demand metrics in over a year. The benchmark 2-year treasury yield backed up another few basis points Wednesday and into Thursday’s Asian trading session, trading near 4.475%, while the benchmark 10-year yield was some four basis points at 4.10% after the Tuesday low below 4.02%.
The Japan’s government bond yield curve flattened Thursday, with the benchmark 10-year JGB yield the pivot point on the curve - almost unchanged near 2.15%, while the benchmark 2-year JGB yield rebounded slightly and the 30-year yield poked another four basis points lower to 3.35%, challenging the lowest levels since lasts November.
Commodities
Gold pushed back above USD 5,000 on heightened Middle East tensions, only to pause as the dollar and bond yields firmed after the latest FOMC minutes showed officials wary of cutting rates. Silver is trading near USD 79, rebounding from Wednesday’s USD 72.35 low, with ongoing focus on tight supply. Gold, meanwhile, remains range-bound between USD 4,860 and USD 5,140 for now.
Oil steadied after its biggest one-day jump since October amid reports that potential U.S. military action against Iran could come sooner than anticipated and may evolve into a weeks-long campaign, with Israel pushing for regime change. Negotiations are ongoing and could still prevent military action which, in a worst-case scenario, could disrupt regional exports and trigger a spike in global energy prices. Brent trades near USD 70.75, a level that has acted as resistance on several occasions since September.
Cocoa futures slumped to a fresh three-year low at USD 3,300 per tons, down more than 45% this year, as traders held back purchases in Ivory Coast and Ghana after international prices fell below levels offered by local governments to farmers. In response, Ghana cut farmgate prices by nearly 30% last week to around USD 2,700 per ton, with Ivory Coast also considering a price reduction.
Currencies
The US dollar rose broadly on more hawkish than anticipated FOMC minutes, as the Fed appears reluctant to pull the trigger on further rate reductions for now. EURUSD was down below 1.1800 late Wednesday, posting a 1.1782 low and close to challenging the pivot lows earlier this month of 1.1766. USDJPY backed up to above 155.00 as US treasury yields likewise backed up, posting a high of 155.34 in Thursday’s Asian session before backing down.
The Australia dollar jumped back higher on strong January labour market data, as short Australia yields rose to price higher odds of another RBA hike at the May meeting. AUDNZD hit a new high of 1.1831 Thursday, its highest level since 2013.
